How to Find a Market Niche

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Has come to you a great idea for a business, but you don’t know if you’re ready to launch it yet. Before going any further, the next step is to find out who your market is.

There are two basic markets in which you can sell: consumers and companies. These divisions are quite obvious. For example, if you are selling women’s clothing in a commercial establishment, your target market is consumers, while if you are selling office supplies, your target market is companies.

In some cases, for example, if you have a printing business, you can offer your services to both companies and individual consumers.

No business, especially small ones, can sell or provide services to all people. The more closely you can define your target market, best. This process is known as creating a niche and is key to success, even for larger companies that sell different products to consumers.

An example of the above is Wal-Mart and Tiffany & Co, both of which are retailers but have very different niches.

Instead of creating a niche, many entrepreneurs make the mistake of wanting to cover “the whole map” by claiming that they can do many things and be good at all of them. These people quickly learn a hard lesson: Smaller is bigger in business, and it is not that you should not try to cover other markets, but that when starting your company, it is much better to focus on a specific branch.

Below seven tips for finding a business niche:

1. Think about who the potential customers are
Who do you want to do business with? Be as specific as possible: Identify the geographic distribution and the type of companies or clients you want to target your business. If you can’t find who you can with do business, your company will not prosper. You must first recognize that you cannot do business with everyone. Otherwise, you run the risk of exhausting yourself and confusing your customers. Today, the trend is towards smaller niches.

2. Focus
Clarify what you want to sell, always remembering that:
a) You can’t sell everything to everyone and b) “smaller is bigger.”

A niche does not mean a particular branch of business. For example, a clothing retail business is not a niche, but a branch. A more specific niche may be “maternity wear for executive women.”

To facilitate this focusing process, here is a list of steps that can help you:

  • Make a list of the things you do best and the knowledge implicit in each of them.
  • List your achievements
  • Identify the most important lessons you have learned in life
  • Look for patterns that reveal your style or approach to problem solving

Your niche should come naturally from your interests and experience. For example, if you have spent 10 years working in a consulting company, but also another 10 years working for a small family business, you can choose to start a consulting business which specializes in small family businesses.

3. Describe the customer’s vision
A successful business uses the golden social rule: “Treat others how you want to be treated“When you look at the world from the perspective of your potential customers, you can identify their needs or wants. The best way to do this is to talk to potential customers and identify their top concerns.

4. Shape

At this stage, your niche should begin to take shape as your ideas along with the customer’s needs and wants come together to create something new. A good niche has five qualities:

  1. It takes you where you want to go. In other words, it fits your long-term vision.
  2. It is requested: that is, there are potential customers.
  3. It is carefully planned.
  4. It is the only business of that type in the city (remember that we are talking about niches).
  5. It allows you to develop different skills to get more profit if you want to cover more business activities in the future, ensuring long-term success.

5. Evaluate

Now is the time to evaluate your proposed product or service on the basis of the five criteria established in Step 4. For example, you may find that the idea you had in mind requires a lot of business trip, which may seem very stressful in your life after a while. That means the idea doesn’t meet one of the above criteria “it won’t get you where you want to go”. Therefore, you may want to move on to consider another business idea.

6. Market test
Once there is a match between you and you business idea, do market tests. Give people the opportunity to try your product or service for free. This can be done by offering samples, such as a tasting or a limited copy that basically shows your creation. The test should not cost a lot of money. If you’re going to spend huge amounts of money on initial market research, you’re probably doing something wrong.

7. Don’t think about it
It is time to put your idea into practice. For many entrepreneurs, this is the most difficult stage. But fear not: If you’ve done your homework, entering the market will be a calculated risk, not just a game of chance.

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